Richard M. Harkless, Ponzi Scheme Figure, Sentenced To 100 Years In Prison; Judge Says He Showed No Remorse
A California man convicted of wire fraud, mail fraud and money-laundering in a $60 million Ponzi scheme has been sentenced to 100 years in prison and ordered to pay nearly $35.5 million in restitution.
Separately, Richard M. Harkless was ordered to pay $42 million in disgorgement, prejudgment interest and civil penalties in a case brought by the SEC. Three accomplices were ordered to pay assessments totaling $28 million and sentenced to a combined total of up to 18 years in prison.
The scheme featured payouts to whet the appetites of investors, a program designed to encourage them to “roll over” money to keep it in the system and appeals to get family members and friends involved, prosecutors said.
Dozens of victims wrote to the judge, requesting a harsh sentence. One of the victims in the case was a 79-year-man who lost $85,000 and now depends on help from a church and a senior center that serves free meals to get by.
Harkless’ 100-year sentence is believed to be the longest sentence for a white-collar crime ever handed down in the Central District of California, and the judge minced no words in condemning the scheme
U.S. District Judge Virginia A. Phillips said Harkless had shown no remorse for his crimes, pointing out that he had taken advantage of vulnerable people, some of whom lost their retirement savings and college funds.
Harkless, 65, caused “every kind of grief and loss imaginable†and demonstrated he “would commit his crimes all over again if given the chance,†Phillips said.
Harkless operated the MX Factors Ponzi scheme earlier this decade. Prosecutors said he began to hide money offshore when the scheme was on the verge of discovery by authorities.
“As the scheme began to collapse [in 2004], Harkless diverted millions of dollars of investor money to Belize and Mexico,” said the office of Acting U.S. Attorney George S. Cardona. “In the final months of the scheme, once Harkless knew that he was under investigation by various state regulators, he accelerated his fundraising and accelerated the transfer of funds to his own accounts in Belize.”
Harkless then fled to Mexico, prosecutors said. He tried to slip back into the United States in 2007, but was arrested by IRS special agents in Phoenix.
The case featured the combined investigative tools of the Justice Department, the IRS, the SEC, the U.S. Postal Inspection Service and the FBI.
Harkless “skimmed investor funds to finance a Mexican crab fishing business, pay personal expenses, and fund overseas bank accounts,” the SEC said today, in announcing the sentence.
Three Harkless accomplices also have been sentenced to federal prison.
Daniel Berardi, Thomas Hawkesworth and Randall Harding pleaded guilty and received sentences of up to six years each.
Berardi and Hawkesworth were ordered to pay more than $11 million in disgorgement, prejudgment interest and civil penalties. Harding was ordered to pay more than $17 million.
Investors in what MX Factors positioned as a government-guaranteed loans program were promised returns of up to 14 percent every 60 to 90 days and encouraged to keep their money in the system by “roll over,” prosecutors said.
“The vast majority of MX Factors investors were ‘reloaded,’ meaning that they were convinced to invest money more than once,” prosecutors said.
Much of the evidence in the case would sound like a familiar refrain to readers of autosurf Ponzi boards and surf promoters, although MX Factors was not an autosurf.
“[S]everal victims testified that Harkless and his co-conspirators encouraged potential investors to try out the MX Factors program, investing in one 60- or 90-day cycle and then withdrawing their money to see if it worked,” prosecutors said.
“Once victims felt more comfortable with the program, Harkless and his co-conspirators encouraged them to invest even more and to get their families and friends to invest as well,” prosecutors said.
Things are looking up.
Hm wonder if Andy Bowdoin is next !!
Hi Whip,
In reading up on the MX Factors case, it struck me how similar the sales approach was to ASD and, later, AVG, with the 80/20 program.
Back in the spring, some AVG members were calling for a mandatory 80/20 program, which more or less was a concession they knew they were in a Ponzi that needed to employ desperate measures to maintain liquidity before all was lost.
The promoters spun it as wisdom — as did the sales staff of MX.
Patrick
Harkless, 65, caused “every kind of grief and loss imaginable†and demonstrated he “would commit his crimes all over again if given the chance,†Phillips said.
This is as true of Andy Bowdoin as it is of Harkless — maybe even more so. Not only is this Andy’s third financial fraud scheme, Andy was either an integral part of AVG or he allowed his stepson and other ASD insiders to operate AVG out of premises he owns, which happen to be the same premises from which he operated the ASD scam. And if that’s not enough, he’s now claiming that ASD is legitimate and that he hopes to operate it once more. Talk about someone who would commit the same crimes all over again, if given the chance!
“wire fraud, mail fraud and money-laundering”
Sounds familiar.
And Bowdoin is not happy with a reduced sentence deal!
I wonder when these guys will get the message that the game is up. They’ve had a good run, but the authorities are now wise to what a ponzi scheme is and they are not treating them lightly.
Hi Marci,
Andy, in an apparent bid to sound reasonable to members he advised had THEIR money taken by the government, did say he’d be willing to tweak the program.
AVG also appeared willing to tweak the program in June, when it suddenly announced it had become a full-service advertising company. Why the company didn’t tweak itself before is one of those great imponderables.
Another imponderable is why Bowdoin, at ASD, waited nearly two years to ponder securities regulations in a serious way.
Like AVG, Bowdoin now wants to tweak after-the-fact. It’s not the first time, though: ASD also expressed a willingness to tweak last fall during the evidentiary hearing, which leads to another imponderable:
Why did AVG even launch with so many unsettled issues — and then wait until June to implement its tweaking program? The judge said no to the ASD tweak last November.
Assuming that AVG’s claim that $2.7 million was stolen from the company is true, then it’s equally true that no money could have been stolen had the company never launched.
Of course, no one ever would have had to debate the Ponzi, securities, wire-fraud and money-laundering issues all over again had AVG never launched — and there would have been no need for the June tweak.
Regards,
Patrick
If Andy reads this article, is he sane enough to see the similarities
or would he think Harkless was ‘hoodwinked’? LOL……….
Quick note:
The Con Artist Hall of Infamy Blog reports that Harkless was a pro se litigant who declared he didn’t know he was running an illegal business, blaming the company’s problems on the sales troops:
http://www.thehallofinfamy.org/blog/?p=56
Patrick
So we can look forward to sentencing in 2012 or 2013 if the pattern holds?
Looking at the link for the Hall of Infamy, one thing (among many) sounded very very familiar. Under the list of Tools from which con men draw their strengths is this:
Strong Cover: He seems almost incapable of wrongdoing. His cover might be his solid reputation and the loans he’s secured from big banks and investment firms. Or it might be a persona he adopts: a pious member of the community or a gifted, but naive, businessman.
It DOES sound familiar. (even though they forgot the part about the age and weak heart.lol)
It is hoped that Andy Bowdoin will be added to that list shortly.
One of these days – unless the time is already here — the Feds are going to decide this crime is a lot like child pornography where one major approach to controlling it is to attack the demand chain, not just the supply chain. If not tomorrow then soon I believe the Feds will go after ALL “investors” and not consider them to be victims but a major part of the crime (just like perverts who look at child porn even if they don’t produce it).
Richard Harkless was a good man…he has been destroyed by the people we look to protect us. Virginia Phillips, not worthy of calling you Judge, karma is a bitch sweetheart…
Suzanne,
Don’t know if you’ve read much of our coverage of the alleged ASD Ponzi scheme, but the tone of your post suggests you’d be sympathetic to the points of view of some of the alleged Ponzi scheme’s supporters.
Some of them have blamed the case on the government, which they portray as “evil” — and, like you, some of them even imply that the judge hearing the case is unfair.
They’ve used expressions such as “brain dead” and “on the take” to suggest the judge would be clueless if she ever ruled against ASD.
Your admonishment of Judge Phillips by saying she is not “worthy” of her title and foreboding claim that “karma is a bitch” might equal or exceed some of the choice language ASD supporters have used.
Patrick